Problems like these occur when the material you are trying to cut is too hard for the cutoff wheel you're using or you are applying too much pressure. Sping the wheel to high RPM and let it slowly do its work. Trying to saw through something with it will only wear down the cutoff wheel eventually causing it to shatter and spray pieces everywhere

I got a Dremel for Christmas and took a minute last week to experiment with cutting cable housing. I used one of the brown discs from the stack in the little container. I think I was cutting standard Shimano STI cable housing. Each cut yielded the same result...a nice cut but the heat caused the plastic to melt and occlude the opening! I only had a couple minutes to try this...but I'm curious if anyone else has had the same experience.

I use the little brown cutting discs. You just have to be very careful not to push _sideways_ against the disc with the housing as you cut, or it will shatter. I think the technique that works the best, which I just came up with, is to clamp the dremel in a vise and hold the housing that you are cutting.

I use medium high speed, and very gentle pressure. I also usually make a preliminary cut with cable cutters, and then trim off 6-7mm with the Dremel for a clean and straight cut.

Then while the plastic is still hot, i use a ballpoint pen to open up the melted inner liner. It works well because you can kind of mold it into a slightly wider opening, which makes threading cables into the housing easier.

For cutting cables themselves, you can use the cutting disc, but a real pair of cable cutters is far superior. I found the dremel tends to cause the individual strands of steel to kind of un-wind, which is a pain.

The small brown disks in the container are very brittle and will crack very easily if you put a side load on them as robo stated. I much prefer to get a fiber reinforced type cut-off wheel which last for a long time.

When cutting the liner you need to go very slow and stop a couple of times to allow the liner to cool off. If you don't do this it will get too hot and the liner will melt as mentioned by others. Take your time and let it cool and all will be well.

Goggles or faceshield.
If it turns as fast as a Dremel and has the potential to fly apart (as the cheap, unreinforced cutoff wheels do), you'll need to wear one or the other.
One close call will convince you that a dollar store pair of plastic goggles is worth your inconvenience.

a dremel to cut cable housing? that's like using a broad sword to do surgery. not only is it over-complicating the procedure, like someone posted above, it's going to melt the plastic inner housing. it's faster to use a hand tool anyway. i use diagonal cutters for brake housing, and cable cutters (like the shimanos, or pedro's or felco's) on derailleur housing. with diagonals, i can usually cut brake housing clean enough that i don't have to use the grinder to clean it up.